Holiday retail sales expected to meet, beat expectations

CBS.MarketWatch.com

NEW YORK (CBS.MW) -- Traditional retailers are on track to meet or exceed sales expectations for this holiday season, as continued strength in the U.S. economy has encouraged people to open their wallets.

"They're doing better than expected or on plan," said Alex Kohl, an analyst at Goldman Sachs. "Overall, it's going to be stronger than last year."

The International Council of Shopping Centers, a trade group of malls, said sales from the day after Thanksgiving through Dec. 19 were up 6.6 percent, beating its own expectation of a 5.5 percent year-over-year gain. A spokesman for the Council said when the post-Christmas sales are done, retail sales are likely to trend even higher.

A spokeswoman for Federated Department Stores
fd
said, "We've had a good Christmas and a good December so far."

Online slowdown

As for online sales, they're expected to show a fivefold increase to $3.35 billion between Nov. 26 and Dec. 26 compared to a year ago, according to Bizrate.com, an online rating company.

However, sales began to taper off as Christmas neared. A Goldman Sachs/PC Data Online study shows that Internet users spent 25 percent less during Dec. 13 to 19 than the previous week's $1.2 billion. Part of the problem could have been shipping and ordering problems as e-tailers scrambled to meet higher-than-expected demand. The report also said that toys and music were the top two purchases, followed by books.

Media Metrix said visitors to online shopping sites increased by 37 percent during the week ended Dec. 19 from last year, but traffic was 6 percent slower than the prior week. Since Thanksgiving week, the number of unique visitors -- consumers that are counted once no matter how many times they visit a site -- is up 33 percent.

Key period for retailers

The fourth quarter, the most important selling period for retailers, accounts for 30 to 40 percent of annual sales and profits, Goldman's Kohl said.

For the five weeks comprising the Christmas selling season, Wal-Mart
WMT, -1.58%
is slated to meet its expectations of a 5 to 7 percent comparable sales increase while its warehouse club unit, Sam's Club, should do better than expected at 6 to 8 percent, Kohl said. Comparable sales are sales at stores at least a year old. Analysts consider it a better benchmark of performance than total revenue since it excludes sales at new stores, which tend to be higher and thus skew overall results.

Kmart
K, +0.04%
is on target to show a 4 to 6 percent sales gain from last year while Costco
COST, -0.74%
should be up strongly, by 8 to 10 percent. Federated, the parent of Macy's and Bloomingdale's, is doing better than expected and should show a 3 to 4 percent gain.

Two underperformers thus far are May Department Stores
MAY, +0.00%
which is falling slightly behind plans at 2 percent, and Sears
S, -2.53%
whose sales are flat as of Dec. 26. However, Sears said it had fewer promotions this Christmas as well.

Overall, Goldman Sachs is forecasting department stores to register a 2 to 3 percent gain, discounters should be up by 5 to 7 percent and specialty apparel is expected to rise by the middle to high single digits.

Despite the brighter outlook, retail stocks except Wal-Mart and Home Depot
"
haven't performed up to par lately. The end of the year won't bring much boost either, since these stocks are typically down during this time as investors wait to hear how holiday business went. The Standard & Poor's Retail Index
RLX, +0.00%
rose by 14.94 to 1004.63, led by Consolidated Stores
CNS, -1.28%
and Toys 'R Us
TOY, -0.76%
Consolidated roseby 12 percent Monday to 16 after getting positive comments in Barron's over the weekend.

Amazon leads, so far

Thus far this season, Amazon.com
AMZN, -1.80%
has led the online shopping race in terms of visitors, followed by EBay
EBAY, -1.44%
and EToys
etys
Toys 'R Us is a close fourth, according to Media Metrix.

While Yahoo
yhoo
didn't make it to Media Metrix's top 10 e-commerce sites, the company said Monday that order volume has risen by more than 385 percent this season from a year ago.

Shares of Yahoo rose by 12 3/8 to 415 while EBay declined by 8 5/16 to 134 and Amazon.com gave up 8 7/8 to 81 1/8. EToys plunged by 5, or 16 percent, to 25 15/16, after Robertson Stephens downgraded the online retailer to "long-term attractive" from "buy."

Intraday Data provided by SIX Financial Information and subject to terms of use.
Historical and current end-of-day data provided by SIX Financial Information.
All quotes are in local exchange time. Real-time last sale data for U.S. stock quotes reflect trades reported through Nasdaq only.
Intraday data delayed at least 15 minutes or per exchange requirements.